June 4, 2013

Last time on the topic, I took a look at the impact of higher college enrollment rates for people age 18-24 versus the labor force participation rate. It seemed to me that higher college enrollment had a pretty direct and obvious impact on labor force participation. But what about people over 25 years old? Are there also more older people going to college and is that impacting the labor force too?

I decided to lump all ages over 25 years together. The Census data has data for ages 25 to 34 and for 35 and over.

Here is the % of the population for ages over 25 who were enrolled in college:

As you can see there is a small increase over the past 30 years. The change for women is more visible. In 1980 there was 3.1% of the women population over age 25 in college and by 2009 it had grown to 4.4%. For men the differences are petty minimal and enrollments have fluctuated a little ranging from 2.7% to 3.1%.

Here is the comparison of the % of the population in college versus the % in the labor force for men:

And for women:

For men the college enrollment is almost flat so its hard to see that there would be any impact to the labor force. For women both rates are up over the decades.

Looking at those two charts above I don't see a significant relationship between the % college attendance and the labor force participation rate.

However the total population over age 25 has a lot of people even including those over age 65. Its a pretty broad group.

Lets look a little closer at the group age 25 to 34. That age range is a lot more likely to be in college in general either in graduate or professional programs, returning to school or first starting college at a later age.

First lets compare the % of population in college versus in the labor force for men age 25 to 34:

And next the women age 25 to 34:

Just looking at those graphics and focusing on the change from year 2000 to 2009 it does seem to me that there was a notable increase in college enrollment. Men were up 2% and women up almost 3%. These are more notable increases. At the same time mens labor force was down 3% and womens down 1%.

For the age group of 25 to 34 year olds we could assume then that increased college attendance was a significant reason for reduced labor force participation.

Lastly lets look at the age group over 35 years old. Much smaller % of that group goes to college.

First the men over 35 :

And then women over 35 :

Here I see little differences in the college attendance % rates. The % of the population over age 35 in college has been almost flat for the past 30 years for both men and women.

1 comment:

Thanks for some relevant and well thought out analysis about the labor force participation rate. I believe that there are four drivers of the drop in the labor participation rate: 1. The huge number of Baby Boomers entering prime retirement age; 2. The increasing number of younger people in school, 3. The increase in the Social Security Retirement age, which keeps more Baby Boomers in the work force and leads to more discouragement among the 25-54 age group behind them, and 4. Of course, the economy.

You are right to peel away these age groups and compare apples to apples, not apples to oranges. However, the 35 and up group will include the millions of retiring Baby Boomers and therefore throw off your calculations. In the over 35 age group, you'd have to compare 35 to 45 or 50 year olds in school vs. the labor participation rate of 35 to 45 or 50 year olds.

Unfortunately, as you mention, I don't believe the Census easily breaks up the number of people in school who are over 35.

In terms of the labor force participation rate, if you just look at men 35-44, you will see a big decrease in the labor force participation rate since 1980, from 95.5% in 1980 to 90.7% now. For women 35-44, you will see a big increase from 65.5% in 1980 to 77.2% in 2000 then down to 74.8% now.

I do think that the increase in people attending school DOES impact the labor participation force of people under 30 or 35, but I don't think it has much of an impact on people over 40.

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